NHS patients should be allowed to use "top-up" payments to buy drugs not funded by the taxpayer, Nick Clegg said today.

The Liberal Democrat leader said it would be wrong to "deny people the right to top up their care, particularly where they are following their clinician's advice, when the NHS has finite resources and cannot provide for everyone".

The government has ordered a review of the current rules that say that patients choosing to pay for expensive new treatments not approved for NHS use, such as anti-cancer drugs that are not considered cost-effective, forfeit their right to further NHS treatment.

The Tories are also reviewing the rules, which are strongly supported by some Labour MPs as a means of preventing a "two-tier NHS" developing.

But today the Liberal Democrats became the first of the three main parties to call for the rules to be scrapped.

In a speech, Clegg told the Reform thinktank: "This is difficult territory. There is a real, human conflict between the needs of the large organisation and the needs of the individual.

"An extra week of life may not count for much on a bureaucrat's chart. But if you're saying goodbye forever to your children?"

Clegg, who released the text of his speech ahead of its delivery at lunchtime, said that he accepted there were potential problems with top-up payments.

"I'm concerned that people may feel the need to get expensive insurance for rare cancers they stand a one in a million chance of developing.

"I'm concerned that vulnerable people – potentially in the last weeks of their lives – are sometimes not best placed to make balanced decisions about treatment.

"I'm concerned the NHS may have to pick up the pieces – at great cost – if extra treatments go wrong.

"I'm concerned that the more people fund extra treatment, the easier it will become for the NHS to shrink to provide just a rump of 'essentials'.

"But I'm a liberal. We cannot continue to deny people the right to top up their care."

However, Clegg did say that he was only in favour of top-up payments provided that three conditions were met.

First, there should be no hidden costs to the NHS. Second, top-up payments should be limited to drugs and procedures that were clinically approved. And, third, the NHS should not use top-up payments as an excuse for cutting services.